Unleashing Metro Growth—What the U.K.’s City Growth Commission Can Teach the U.S.

As the United States suffers through the final weeks of a particularly bitter midterm election, something remarkable is happening in the United Kingdom. All three major parties in Britain have concluded that devolving power away from central government and toward metropolitan areas will improve economic growth and government performance. Tory, Lib-Dem, and Labour alike find themselves competing over who can articulate a more complete vision of devolution. It’s enough to make you believe in representative democracy again.

The Royal Society of the Arts’ City Growth Commission has released a well-timed report that explains the need for devolution in the U.K. and creates a blueprint for how to get it done. “The drumbeat of devolution has grown ever louder,” writes Jim O’Neill, chairman of the commission. “Over recent months, the importance of cities in driving growth and prosperity has been increasingly recognized, rising up the political agenda to the highest levels.”

These calls for devolution are long overdue in the U.K., which has one of the most centralized systems of public finance of any major OECD country. Cities lack nearly all of the powers that we take for granted in the United States—they cannot raise their own revenues, they cannot designate funding for specific projects, most don’t even have directly elected mayors. As it stands, taxes are paid overwhelmingly to central government—about 95 percent of all revenue in Britain, compared to about 65 percent in the United States, according to the OECD—and Whitehall then redistributes compartmentalized funding to all of Britain’s cities. This system prevents timely, tailored responses to pressing local issues and eliminates any incentive for innovative local policymaking.

That’s where the City Growth Commission comes in. It details two sets of recommendations: one proposing a specific process of devolution and outlining the specific powers to be devolved; the other detailing how central government can best set the stage for metropolitan success.

In the first set, the report lays out a process in which metropolitan areas apply to an independent city-region devolution committee, which would grant powers to applicants depending on established criteria. At the onset, some cities will be much better prepared to take on devolved powers, and would receive more responsibilities than others. But the minimum devolution “offer” would consist of various policymaking and budgetary flexibilities, and additional powers could be added following a review period every five years. As cities prove themselves more capable of running their own affairs, more power would be devolved to the local level.

The second set of recommendations calls for national investments in boosting digital and physical connectivity throughout the country, creating data collection regimes at the metro level, and bolstering universities’ ability to contribute to the cities in which they are located. Culturally, it calls for a change in tone in central government, which should see its role as that of a convener, not a commander, of empowered local forces.

The United States is much more devolved than the United Kingdom, and as a result, our cities and metropolitan areas have been able to leverage their distinctive economic roles and potential. Our 388 metropolitan areas are home to 84 percent of our population and 91 percent of our GDP. In 47 of our 50 states, the majority of state GDP is produced in metro areas. The notion of a national or state economy is, in a sense, imagined—what we really have is a dynamic network of metropolitan economies, each with unique assets and advantages. This market power should lead to political power. Metro areas with flexible decision making abilities are more pragmatic and nimbler than higher levels of government, and because metros all operate in unique circumstances, they need customized solutions, not one-size-fits-all policies from Washington.

As such, there are a number of things we can learn from the U.K.

First, we need to emulate Britain’s purposeful, evidence-driven conversation about the distribution of power at different levels of government. The stark fact is that American federalism has atrophied and grown stale over the decades and, with the demise of the Advisory Commission on Intergovernmental Relations in the mid-1990s, has become a subject dominated by rhetoric rather than fact.

Cities and metropolitan areas may be the undisputed engines of the national economies but their flexibility to grapple with super-sized economic, social and environmental challenges is hampered by legacy federal and state governments. As I wrote with my colleague Mark Muro in 2012, “Too many federal programs remain rigidly prescriptive, siloed, or redundant—and too many apply outdated processes to 21st century concerns.” Incredibly, excessive micromanagement by the federal government remains the rule even as funding for many federal programs (e.g., public housing, transportation, workforce development) is scaled back.

States go even further, often limiting the general ability of cities and metros to act. As Gerald Frug and David Barron show in their book, “City Bound,” all of our states have very different legal configurations determining how cities are able to conduct their own affairs. But there is one common thread: “Current legal rules are not designed to enable cities, within state-defined limits, to pursue a vision of their future. There is too little city discretion on issues of major importance to local residents.” State legislatures have outsize influence over what cities can and cannot do, a status quo that stems from lack of confidence in local judgment, preference for state control, and a tendency to favor privatization over local democracy.

It’s time for our metro areas to challenge this outdated configuration. We need, in short, a full throated discussion among leaders in municipal, county, state, and federal governments—and the broader network of metropolitan private and civic leaders who co-govern cities and metropolitan areas. Rather than the top down frameworks presented by pastpresidential efforts and commissions, this effort needs to be bottom up. It needs to be driven by ideology-free discussions of what works and what doesn’t. And it needs to lead to concrete ideas for reforming how we govern ourselves. The United States needs its own Metro Growth Commission modeled on the excellent work of the RSA.

Second, the United States should consider adopting some of the specific vehicles by which the U.K. is devolving power. Central government in Britain is in the process of negotiating a series of “city deals” with eight major metro areas that will grant specific powers and funding to local actors. Manchester provides a shining example of what is possible when a national government places itself in the service of the natural economic geography, the metropolis. All 10 separate Manchester authorities banded together in 2011, forming the Greater Manchester Combined Authority. Soon after, the GMCA successfully negotiated a deal with Whitehall that allowed for Manchester to earn back a portion of its tax revenue to create a revolving infrastructure fund, establish an investment framework to guide economic development, build a city apprenticeship and skills hub, and form a housing investment fund, among other powers.

Something similar might be implemented in the United States. As it stands, many of the problems metro areas face cut across artificial administrative jurisdictions and separate but related areas of domestic policy (e.g., transportation and housing, the complex slew of anti-poverty programs). If metro areas were able to strike specific deals with federal or state governments to reduce oversight, lighten reporting requirements, or consolidate funding streams, for example, they would be better able to bring complex efforts to fruition.(For more detail see Chapter 8 of The Metropolitan Revolution as well as the Metropolitan Opportunity Challenge proposed by Elizabeth Kneebone and Alan Berube) These deals would be fundamentally about trust—if metro areas have proven themselves to be responsible, capable actors, higher levels of government should reward them by simplifying rules and regulations that are inhibiting progress.

Third, the federal government needs to get back in the game. They must recognize that there are areas where they simply have to lead. Cities cannot take the reins in developing inter-metro transportation, funding research and development, establishing a sensible immigration policy for the nation, or creating healthy platforms for international trade, to name a few. Our federal government has been derelict in its basic duties, and would do well to follow the self-effacing path the British government has embarked upon.

As the U.K. enters its “decentralization decade,” the United States should take note. It’s time that we rewrite our own federalist contract and realign power and responsibility for the modern era in which cities and metropolitan areas, rather than nations and states, drive economies and progress.

Bruce Katz, a vice president at Brookings and founding director of the Metropolitan Policy Program, served on the City Growth Commission.